FML partner Andrea Harrington was quoted in an article in Accounting Today about the future of the tax landscape in 2025 and beyond. As the article states, “the Republican majorities in the Senate and House of Representatives will grant President-elect Trump an easier time in refreshing many of the expiring provisions in his 2017 Tax Cuts and Jobs Act, including priorities such as the Qualified Business Income Deduction and 100% bonus depreciation.”
Andrea commented on how the enforcement capabilities of the IRS were strengthened from funding granted to it under the Inflation Reduction Act of 2022 and that she hopes that remains. Here is the section where she is quoted:
Andrea Harrington, a CPA and partner at the Glastonbury, Connecticut-based accounting firm Fiondella Milone & Lasaracina, said she hopes funding for the IRS is maintained, specifically directing resources towards “processing amended returns related to COVID relief provisions.”
“The uncertainty over what exactly will happen makes planning a bit more challenging. … We’ll be watching legislative proposals even more closely so we can pivot in our recommendations as needed,” Harrington said.
Andrea had some additional thoughts on the TCJA’s impact on the tax landscape.
Some of the most significant provisions of this tax law broadened the brackets and reduced the top individual tax rate, as well as doubling the standard deduction and capping the state and local tax (SALT) deduction to help simplify individual compliance by reducing the number of itemizers.
The TCJA also lowered the corporate tax rate and added a qualified business income (QBI) deduction to level the playing field between flow through businesses and corporations. Overall, I think these changes were tax neutral or resulted in a lower tax bill for my client base, which is predominantly owner-operated businesses.
I think the capitalization of Section 174 costs, which was the revenue balancer of the TCJA, has been extremely burdensome and likely negatively impacted investment in research and development for many businesses that simply could not afford the tax hit. I am hopeful that, with continued bipartisan support, a current deduction of these costs will be reinstated.
Additionally, extension of the expiring provisions of the TCJA would lend some stability to clients trying to plan in an uncertain economic climate.
I also hope that the current level of funding of the IRS is maintained, specifically in regard to the the amended returns related to Covid relief provisions, which continue to have an extreme backlog. It would also be nice if they put more resources into providing timely and consistent phone support for taxpayer and practitioner inquiries.
